U.S. warns telcos not to buy gear from China's Huawei, ZTE

According to market research firm IHS iSuppli, U.S. telecom operators were already wary of buying equipment from Huawei and ZTE because of the investigation and other scrutiny by the U.S. government. Despite their global sales growth, neither has been able to crack the U.S. market despite a decade of effort, IHS said.

"The U.S. government has blocked numerous contracts and acquisition deals between American companies and Chinese equipment makers, usually in an indirect manner," said Lee Ratliff, principal analyst for broadband & digital home research at IHS, in a statement.

Ratliff added that the committee's report could further hamper the ability of Huawei and ZTE to penetrate the U.S. market in the future.

Jagdish Rebello, director for consumer and communications at IHS, said the concern among U.S. lawmakers mostly centers on the transition to 4G wireless networks, which will bring an exponential increase in complexity.

"Because of this, many carriers are now contracting with networking OEMs to not only supply the equipment but also to partner with carriers to build the networks," Rebello said. "This makes the networking equipment makers, such as Huawei and ZTE, a critical part of the infrastructure deployments."

According to IHS, became the world’s largest supplier, of wireless communications infrastructure equipment during the first nine months of 2011, with sales of $8.9 billion and market share of 29 percent. ZTE ranked fifth in the world over the same period, with revenue of $2 billion and market share of 6 percent, IHS said.

Huawei is regarded as a price and technology leader, according to IHS. The company has won contracts with many European carriers for 4G deployment and network management and with many carriers in the emerging markets for 3G deployment, IHS said.

The U.S. Department of Defense previously highlighted Huawei’s links to the Chinese government in a 2008 report to Congress. Huawei’s efforts to buy its way into the U.S. market through acquisitions of 3COM and 2Wire were scuttled due to concerns of a U.S. government veto, according to IHS.

IHS said Huawei and ZTE reported in 2010 that the Indian government started blocking purchase orders placed with them based on similar security concerns.

"According to the report, both Huawei and ZTE failed to provide sufficient evidence to alleviate the committee's concerns. ",
Interesting. Guilty until prove innocent. The principle used here is opposite to the court cases.

That's an interesting perspective. To some degree, I'd say it does seem as though these firms were accused of something and asked to prove their innocence. Being that these are politicians, there are likely some politics involved. I felt that the report was pretty strongly worded, which surprised me.

For the record, here are a couple of excerpts from the Huawei statement about the report:
"The report conducted by the House Permanent Select Committee on Intelligence, which took 11 months to complete, failed to provide clear information or evidence to substantiate the legitimacy of the Committee's concerns."
"Despite our best effort, the Committee appears to have been committed to a predetermined outcome."
Whole statement can be found here:
http://www.huawei.com/en/about-huawei/newsroom/press-release/hw-194454-hpsci.htm

The evidence has been collected for a while. Yes the report was politically motivated, but the threat is real. China is NOT our friend. I try to avoid using anything made in China, but it is next to impossible. Just be aware that many of their advanced devices are not necessarily benign.
Just my opinion.

Chinese should really be educated by your "China is NOT our friend". I believe the majority of Chinese are not aware of that. They are still in their dream of a peaceful world.
BTW, you want a friend, you get a friend. If you want an enemy, you will get an enemy.

I think that the threat to national security is an excuse. The real reason is the lack of confidence of competition. Huawei is very successful in Europe, such as UK's 21CN. No one has challenged Huawei's threat here. The answer is E///, ALU and NSN. To look at US, Cisco appears afraid of the march of Huawei and ZTE and all the semi's are kissing their arses to provide them the most advanced chips with peanuts price.
I would like to see the Americans stand up to face the competition to make something like iPhone rather than moan pathetically like the Congress.

If they wanted to, Huawei and ZTE probably could incorporate capabilities into their telecom gear that could be used for surveillance, although the House Intelligence Committee provided little or no evidence that they have done so. When asked about evidence of spying, committee members said Huawei and ZTE officials wouldn't answer their direct questions on the matter. That said, another large enterprise exists that is fully capable of sweeping up nearly all the world's communications whether or not it is encrypted. The name of this organization is, of course, the National Security Agency. NSA insiders like William Binney, who worked on top-secret surveillance programs during the Cold War, have revealed that NSA has been using the surveillance technologies originally designed for foreign gathering to spy on Americans. Why isn't the House Intelligence Committee investigating this?